The Q3-25 quarter spot prices have struggled to meet forward price expectations leading to a softening of the current quarter forward price and all future periods. However, the quarter is not yet finished, and there is time for a recovery.
The current quarter, particularly in the first two-months or so, is a key driver on the forward market for the following quarters, calendar years and financial years. If the current quarter spot price delivers beyond expectations, then the forward market rallies and conversely if the current struggles to meet expectations, then the forward market will soften. This Q3-25 quarter is no exception.
Third quarters like Q3-25 usually consist of two halves; the first half is driven by classical winter conditions of cold weather driving demand, short daylight days with low irradiance leading to potentially strong or extreme spot prices; while the second half reflects classical Spring conditions with more moderate weather, plant outages and winds increasing, although erratically. In QLD, third quarters are also in the middle of the bushfire season which also bring its own risks to the power grid caused by the risk of equipment being damaged and smoke drifting across transmission lines that can cause flashovers or arcing leading to outages.
This Q3-25 is no exception, and we have another week before we transition to the second phase of the quarter.
So far the Q3-25 spot prices have not lived up to pre-quarter expectations although we can all remember Q3 last year which had extreme prices on 5 August 2024. Last year was also dealing with low water storages in Tasmania until the rains came in August, so energy flows were flowing southward from VIC, rather then the traditional flow of northward. Tasmanian Jul-24 average spot price was $181/MWh compared to this year of $118/MWh.
Queensland daytime prices are being impacted by more consistent low prices compared to previous years; which reflects the increased presence of roof-top and grid-scale solar in the State. Our Generation and Spot Market report will have more to say about this outcome.
1.0 Highlights
The key highlights for the month are:
- Market prices have softened across the board in the forward market
- The market experienced a sharp drop in traded volume from June to July 2025, but activity remained higher than the same period last year
- Swaps remain the dominant instrument in both activity and volume, with Options now a significant contributor and Caps a small minority
- Morning Peak and Evening Peak contracts are in the early stages of market adoption, with limited but notable open interest
- Spot price spikes on or around the busiest trading days were likely a key driver of increased forward trading activity
- LGC certificate prices for Cal-25 to Cal-29 fell sharply over the month, continuing the downward trend of the environmental certificate market
2.0 Forward Market Overview
Calendar forward prices have softened in all Regions except for SA, returning to May levels.
